Tier VI just passed in the Assembly

It’s 7:50 am, the sun is rising and Assembly members have just hustled to the elevators after approving the governor’s Tier VI pension plan. The initial vote tally was 95-44.

I ran into GOP Assemblyman Tony Jordan from Washington County as he headed out and he said the actual vote took a good two hours, with Democratic floor leaders halting the process several times in order to hustle up enough votes for passage.

“It got to 50 and sat there for a while. Then it got to 62 and sat there for a while,” said Jordan, who voted “yes.”

There’s no more Assembly activity today — they gaveled out and back in after midnight so they technically had a session today.

The Senate passed the pension reform earlier, after most of the Democratic conference members walked out in protest of what they said was a gerrymandered redistricting process.

One Democrat stayed behind, Daniel Squadron, and he requested a quorum call before the pension vote arguing a quorum of 38, not the 37 present were needed for an appropriation bill, but the pension measure was a program bill.

All of this, of course, happened in the dead of night while most people were fast asleep.

“It was all done in darkness and under a message of necessity,” Jordan said. He added that this is, ironically, Sunshine Week which is supposed to be a celebration of openness in government.

Here are releases from the governors office and from CSEA.
From Cuomo:

Governor Andrew M. Cuomo today announced the passage of a sweeping pension reform plan that will save state and local governments and New York City more than $80 billion over the next 30 years.

“For years, local governments have struggled to cope with soaring retirement costs, driving up taxes on New York families and small businesses,” Governor Cuomo said. “This bold and transformational pension reform plan is a historic win for New York taxpayers and municipalities that will save more than $80 billion over the next 30 years, while preserving retirement security for public workers. Without this critical reform, New Yorkers would have seen significant tax increases, as well as layoffs to teachers, firefighters and police.”

The state’s rapidly growing pensions costs are one of the most expensive mandates for local governments. In 2002 pension payment from local governments were $1.4 billion and have grown to $12.2 billion in 2012, and increase of over 650%. The pension reform plan passed by the Senate and Assembly today recognizes the unsustainability of the current system and takes unprecedented steps to control growth, saving local governments and New York City more than $80 billion over the next 30 years.

The legislation puts in place a new Tier VI pension plan that includes:
· New Employee Contribution Rates: The new tier increases employee contribution rates in a progressive fashion to ensure lower paid state and local workers are not seriously affected. Employee contribution rates vary depending on salary:
o $0 – $45,000: 3%
o $45,000 – $55,000: 3.5%
o $55,000 – $75,000: 4.5%
o $75,000 – $100,000: 5.75%
o $100,000+: 6%
These rates remain substantially lower than the large majority of similar state systems around the country. The new tier impacts only newly hired employees. Existing employees and retirees retain all benefits.
· Increase of the Retirement Age: The pension reform includes an increase in the retirement age from 62 to 63 and includes provisions allowing early retirement with penalties. For each year of retirement prior to 63, employee pension allowances will be permanently reduced by 6.5%.
· Readjustment of Pension Multiplier: Under Tier VI, the new pension multiplier will be 1.75% for the first 20 years of service, and 2% starting in the 21st year. For an employee who works 30 years, their pension will be 55% of final average salary under Tier VI, instead of 60% under Tier V. This readjustment brings New York more in line with most other states and will save billions of dollars for taxpayers and local governments.
· Vesting: Under Tier VI, employees will vest after 10 years of service.
· Protect Local Governments From State Pension Sweeteners: The agreement requires the state to pre-fund any pension enhancers, ensuring that these costs are no longer passed to local governments.
· Adjustments to Final Average Salary Calculation to Help Reducing Pension Padding: The agreement changes the time period for final average salary calculation from 3 years to 5 years. To limit how much overtime can be used to determine an employee’s pension, pensionable overtime for civilian and non-uniformed employees will be capped at $15,000 plus inflation, and for uniformed employees outside of New York City capped at 15% of base pay. Tier VI puts in place new anti-spiking measures which cap growth in salary used to determine pension allowances at 10% for all employees statewide. These reforms will take major steps toward addressing instances of abuse and pension padding. Tier VI also eliminates lump sum payments of unused sick and vacation time from the calculation of final average salary.
· Voluntary and Portable Defined Contribution Option: The legislation includes an optional defined contribution plan for new non-union employees with salaries $75,000 and above. In the modern economy, employees often change jobs multiple times and need pension portability. Many states, the federal government, and most private employers provide some form of defined contribution plans to their employees. The state will make an 8% contribution to employee contribution accounts. Currently, SUNY and CUNY offer such an option through TIAA-CREF that has been successful and popular. This is a voluntary option for those employees who prefer the portability and vesting feature not available with defined benefit options, and will help attract top talent to state government.
· Adjustments to SUNY/CUNY TIAA-CREF Plan: Under Tier VI, SUNY and CUNY employees who elect the TIAA-CREF plan will receive an employer contribution of 8% of salary for the first 7 years of service and 10% thereafter.
· Limiting Number of Sick and Leave Days that Can Pad Pensions: Tier VI reduces by half- from 200 to 100- the number of sick and leave days that can be used for retirement service credit.
· Salary Reform: Previous tiers allowed salaries from an unlimited amount of employers for calculating retirement benefits. Tier VI allows only two salaries for the calculation.
· Limiting Pension Benefit of High Paid Employees: For new higher paid employees, the amount earned above the Governor’s salary (currently $179,000) will not be eligible for pension calculation under Tier VI.

From CSEA

CSEA President Danny Donohue slammed Gov. Andrew Cuomo and the state legislative leadership, Senate Republicans and Assembly Democrats for, a politically expedient deal that trades the future retirement security of working New Yorkers for legislative redistricting lines.

“Tier 6 shoved down the throat of state legislators fixated on their own self-preservation, will be devastating to 99 percent of New Yorkers,” Donohue said. “This deal is about politicians standing with the 1 percent – the wealthiest New Yorkers – to give them a better break while telling nurses, bus drivers, teachers, secretaries, and laborers to put up and shut up.”

Last December, Cuomo pushed for a tax break for the wealthiest New Yorkers that exceeds the pensions of most working people.

There are no immediate savings from the Cuomo Tier 6 plan. Potential savings over decades will only come at the expense of working people. While hard-pressed localities will see no relief in the short term from Tier 6, they will be affected by loss of state services, downsizing and consolidation of vital facilities, along with other aid reductions and a further erosion of their middle class as workers get squeezed or have their jobs eliminated. CSEA pointed out that facts had little bearing on the governor’s agenda.

Donohue criticized the governor’s scorched earth pursuit of his political ambition for giving new meaning to the term “bully pulpit.”

“Regardless of the governor’s glib talking points, New Yorkers should understand that this deal did not result from meaningful debate and good judgment – it resulted from political expediency – and it will have harmful consequences to people and communities now and for a long time to come,” Donohue said. “No good will come from this.”